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An Experimental Study of the Impact of Dynamic Electricity Pricing on Consumer Behavior: An Analysis for a Remote Island in Japan

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  • Thoa Thi Kim Nguyen

    (Graduate School of Economics, Ritsumeikan University, 1-1-1 Nojihigashi, Kusatsu, Shiga 525-8577, Japan)

  • Koji Shimada

    (Faculty of Economics, Ritsumeikan University, 1-1-1 Nojihigashi, Kusatsu, Shiga 525-8577, Japan)

  • Yuki Ochi

    (E-konzal, 207, 3-8-15, Nishinakajima, Yodogawa, Osaka 532-0001, Japan)

  • Takuya Matsumoto

    (Information Science and Technology Center, Kobe University, 1-1 Rokkodai-cho, Nada-ku, Kobe 657-8501, Japan)

  • Hiroshi Matsugi

    (Hyogo Prefectural Institute of Technology, 3-1-12 Yuihira-cho, Suma-ku, Kobe 654-0037, Japan)

  • Takao Awata

    (Kei Communication Technology Inc., Shinko Building 8F, 8 Kaigandori, Chuo-ku, Kobe 650-0024, Japan)

Abstract

The aim of this research was to investigate how consumer behavior changes after application of dynamic electricity pricing and the persistence of those changes. Based on the investigation results, the authors also discuss the policy implications of demand management to shift consumption to days that have more solar radiation, while at the same time reducing overall consumption. The dynamic pricing experiment was implemented on Nushima Island, located in the center of Japan, with the participation of 50 households. The methodologies used in this study are panel analysis with random effects, and the difference in differences method. Several linear regression analyses are performed to predict hourly electricity usage from a number of explanatory variables, such as life-style factors, the frequency of access to the visualization website, control for weather factors (wind speed and temperatures), and other attributes of the households to predict the log of hourly electric energy consumption. The results show that dynamic pricing brought about 13.8% reduction of electric energy consumption in comparison with the pre-experiment period. Also, by applying a new experimental design approach, this study finds data supportive of habit formation by participants. Based on the findings, this research tries to develop a policy for sustainable energy conservation in remote islands.

Suggested Citation

  • Thoa Thi Kim Nguyen & Koji Shimada & Yuki Ochi & Takuya Matsumoto & Hiroshi Matsugi & Takao Awata, 2016. "An Experimental Study of the Impact of Dynamic Electricity Pricing on Consumer Behavior: An Analysis for a Remote Island in Japan," Energies, MDPI, vol. 9(12), pages 1-22, December.
    • Handle: RePEc:gam:jeners:v:9:y:2016:i:12:p:1093-:d:85676
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    References listed on IDEAS

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    Cited by:

    1. Lo Piano, S. & Smith, S.T., 2022. "Energy demand and its temporal flexibility: Approaches, criticalities and ways forward," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    2. Thanh Tam Ho & Sarana Shinkuma & Koji Shimada, 2018. "The Effects of Dynamic Pricing of Electric Power on Consumer Behavior: A Propensity Score Analysis for Empirical Study on Nushima Island, Japan," Energies, MDPI, vol. 11(8), pages 1-22, August.
    3. Penelope Buckley, 2020. "Prices, information and nudges for residential electricity conservation : A meta-analysis," Post-Print hal-02500507, HAL.
    4. Buckley, Penelope, 2020. "Prices, information and nudges for residential electricity conservation: A meta-analysis," Ecological Economics, Elsevier, vol. 172(C).
    5. Giovanni Pau & Mario Collotta & Antonio Ruano & Jiahu Qin, 2017. "Smart Home Energy Management," Energies, MDPI, vol. 10(3), pages 1-5, March.

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